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Supporting Documents to the Definitive Purchase Agreement.

The Process from LOI to Signing the Purchase Agreement.

Read on to see how the process unfolds and what it includes. Most of our closings are virtual closings where documents are sent electronically or via next-day delivery. Alternatively, they may sign the documents electronically or via FedEx. On the closing date, the seller and buyer may physically meet around a table, where the buyer delivers the final payment and the seller signs and delivers the closing documents. The DPA sets a date for completing the transaction, the process known as the “ closing.” Before the closing date, the seller and the buyer should resolve any remaining contingencies. However, the seller retains ownership of the entity while the buyer forms a new entity to purchase the assets.

This agreement transfers the individual assets from the seller to the buyer by signing a bill of sale. Shares in an LLC are technically called “membership interests.” However, for the sake of simplicity, most parties refer to the transaction as a “stock sale.”

By purchasing the shares of the entity, the buyer owns the entity’s assets. This transfers the shares of the entity, otherwise known as a corporation or LLC, that owns the assets of the business. The transaction can take two general forms: The sale is canceled if these contingencies are not satisfied before closing or before the expiration of the DPA. If the DPA is signed prior to closing, contingencies may remain, such as denial of approval by key third parties, including the lender, lessor, franchisor, or licensor. However, a change of possession of the business does not occur until closing, when the bill of sale is signed and delivered to the buyer in the case of an asset sale or when the stock certificates are signed in the case of a stock sale. The DPA is often signed before the closing occurs. This replaces any previous agreements, such as a letter of intent or offer to purchase. The DPA is called “definitive” because it is the final agreement signed between the parties. What is a Definitive Purchase Agreement (DPA)?Ī DPA transfers the ownership of a business and its assets.